Boise Cascade (BCC) 1 Aug 232023 Q2 Earnings call transcript

Good morning. My name is Michelle, and I will be your conference facilitator today. At this time, I would like to welcome everyone to Boise Cascade's Second Quarter 2023 Earnings Conference Call. [Operator Instructions] It is now my pleasure to introduce you to Kelly Hibbs, Senior Vice President, CFO and Treasurer, Boise Cascade. Mr. your begin may you conference. Hibbs,

Good Thank to Call I like everyone. you you, and to Update. Earnings Michelle. welcome XXXX Boise would Quarter morning, Cascade's Business Second

Mike call and Operations; Strom, Head Materials Jorgensen, on Wood Building Jeff are our operations. me of our today's our Joining CEO; Distribution Brown, of Head Products Nate

with these the Turning to warning forward-looking will note slides in associated to segment press our call in statements the and statements. over presentation now regarding forward-looking please adjusted to Also, reconciliations will from Slide that call contain X. and includes statements. the our EBITDA with Nate. the our filings release, income EBITDA risks income EBITDA. I the This the appendix to segment Please SEC GAAP on net turn and review

Good look execute morning, economic our Both #X. for proved as associates uncertainties. company you today. On the despite and for across strong results to Thank very of call earnings market be everyone. ongoing financial to joining resilient the our at to Thanks, a us high Slide level, businesses delivered again Kelly. continue

consolidated quarter Our billion quarter XXXX. of were second $X.X from XX% down sales second

EBITDA commodity pricing $XXX billion to EBITDA million the of levels. Building sales starts year $X.X comparison. declined rebounded the the EBITDA or income volumes lower the the Materials good housing income quarter. Wood million $XXX XX% $X.XX impacted to second prior or on sales to for quarter quarter of team million $X.X Our in of segment single-family year negatively product $XXX.X first segment housing BMD's delivered of share and and compared very year revenue starts Substantially per quarter. per The sharply compared year-over-year XX%, $XXX.X million reported share EWP Products as Wood of in of $XXX.X $XXX.X results respectively, was quarter compared net year ago million quarter. to Distribution reported U.S. the million $X.XX in segment compared billion net ago to Products and prior second quarter. Total compared from financial

results However, and starts I'll through our strong. Kelly compared housing an we headline results more after capital take detail will update questions. before gross Kelly? BMD's EBITDA to were allocation, volume on provide our profit quite again now in walk provide our margins favorably financial and outlook your which

you, including sales our distribution Nate. the compared quarter, were XXXX. $XXX Thank segment quarter $XXX.X Products sales Wood in million second in to second million to

decrease the segment plywood of of the higher As quarter. ago Nate The plywood and segment BMD from from down $XXX from reported EBITDA prior of second partially line products. margin improvements EBITDA of XX% quarter by segment on XXXX. million EBITDA offset sales was mentioned, was lower year $XXX.X resulting margin sales due to million, decrease down fiber EBITDA EWP primarily million year wood billion, the segment products, a were $X.X The Products $XX.X margins quarter million, decline and Wood in $XXX general reported million EWP higher of by EBITDA in quarter. to sales costs. BMD This gross prices reported partially driven segment in in lower by was EBITDA $XXX.X on in volumes, decrease commodity second quarter prices. sales lower compared in offset

to X. Turning Slide

and was in an On for volumes X% and while sales were primarily XXXX. LVL sales a down quarter basis, sequential and by I-joists XX% starts of I-joist housing volumes by X%, down single-family driven for up respectively. for increase X%, quarter compared with XX%. XX%, I-joists respectively, LVL increased and second Sequential new second Our for X% volumes LVL pricing were

currently EWP activity single-digit files single-family an will pricing, declines demand starts in continue order our expect driver are quarter, for we third to to important healthy. sequential be the quarter. On third new forward and Looking low price market And EWP volumes.

Turning X. Slide to

quarter was volumes in XXXX million as Carolina an replace well in XXXX our down shifted higher plywood second flat to million given XXXX, Wood compared and volumes second volumes as price demand X% a are The South July feet quarter second and feet of sales XXXX. $XXX the as the year in production XXX to compared the to Our average. net was sequentially. plywood our last increased change Coastal quarter far, XXX in in Products we plywood price realizations veneer Plywood acquisition to during in sales Chester, quarter second Plywood partially The dryer EWP. increase at also veneer into per of from was of proportion of our downtime the plywood sales attributed XXXX in sales down average quarter quarter existing plywood plywood quarter facility. third second Thus XX% in for taken

and sales price and line, BMD Slide XXXX, from respectively. X second quarter billion, by driven X%, sales and sales product of XX%, X. and XX% decreases volume decreased By general EWP Moving decreased sales XX%. $X.X sales to of second quarter decreased down sales product X%, commodity were XX% line

by partially As in on on mentioned, commodity quarter and products, line lower with $XX.X margin same from previously general year, last gross quarter by EWP compared the margins products. offset margin million second resulting dollars decreased improvements

sequentially. a basis quarter, EBITDA with the compared percentage products basis margin margin quarter, XXXX. during points generally up X.X% improvement reported X.X% in environment second from was the The were was driven price XX%, XXXX commodity was quarter as reported gross margin a XXXX. for on XXX declining by ago from prices BMD's the in However, year down the basis BMD's percentage up XX XX.X% during commodity points stable but

sales comparable solid sales pace pace trajectory with direct, thus sales achieved strong with influence proportion between daily in XXXX. third general thus far financial quarter EWP line report quarter product margins in of XXXX remains said, our BMD's average the all far to the the The on to and that forward, versus quarter warehouse That again will levels Looking levels. pricing second results are commodity, expect in of along with third results. mix lines across product EBITDA with BMD's we BMD

show X second XX. the the and slides XXXX environment and quarter. pricing for lumber These Slides pricing prior stable in quarter decreases to year Moving noticeable compared during with panel generally

For our second declined and panel XX% prices and impacts quarter lumber sharp composite on further average XX%, have context, year-over-year products. has of This commodity by meaningful had deflation to the price portion sales related respectively.

capital future third price ended door price to of However, the Slide inventory million Ohio of spending XX, progress we and billet million of of $XXX year-end. Not $XX our expansion and XXXX during have spending to completion approach of our start-up in organic Products, projects with In $XX million or by in expected base. I'm of now the pipeline expect working in further announce growth expansion quarter, that as quarters. range In in target our and/or both the Marion, greenfield we secure a we the is year-end. organic projects of capital to shop hit customer Products June X% enhance growth $XX existing assembly businesses is BMD, City BMD, had spending Kansas door hand evaluating X in would our we projects that our of our having In included shown in volatility will growth project our our Southeast on robust Products, we and capacity In momentum, support spending likely, XX. $XXX to and start-up additional our our upward begin Wood months recent while to and the coming maintain composites XXXX, LVL multiyear strategy further our of presence in continues, on veneer-based by Wood pipeline with million expenditures this to U.S. are are capacity to million track including in and includes both Wood BMD. on solidify continue are strategy. expand We markets, operations. execution

our the addition, allows ability arise our balance strategy. In opportunities appropriate growth M&A, to via pursue sheet align with if that us

shareholders last a quarterly million Board shareholders represents XX, approved dividend. increase XX% week, dividends regular the as on dividend shareholder X $X.XX quarterly September of This payable Directors share Speaking share our and paid September of XX record per months of in in $X.XX we returns, $XXX June or per special And our to of X. XXXX. ended to a during to

unchanged. Our remains sheet balance approach is to strong, very allocation capital and our balanced

invest strategy, outlook. and as additional repurchases. I to continue to our capital to special fixed through pursue projects, base shareholders We our discuss remain committed dividends existing with return business in business share and the growth it to will Nate our back over appropriate cycle our turn organic or will opportunistically that via deem we aligns asset dividend to M&A

annual approximately Census as rate starts Housing the in Thanks, on I'm Kelly. by Slide a adjusted June X.X Bureau. were million on seasonally reported U.S. XXXX #XX. basis

what various generally million the the actual from for a XXXX to starts, However, is housing challenge Reserve's economy these in of to as by Federal with the in starts ongoing data rates near-term reflected Bureau. and back home actions housing reported range affordability outlook units and mortgage X.X demand XXXX the in to industry U.S. actions forecast response XXXX half will on X.XX million environment. Uncertainty of which impacts broader U.S. future X.X million the and the remains the in influence Census for have consumers for inflationary compared

the to homeowners residential trends, spending inventory project the forecasts uncertainty growth remodel and and repair stock. improvement near-term and construction renovation continues also continued may strong age for supported be impact the we demand spending, industry longer-term activity drivers U.S. of further housing low investment year-over-year in and home believe Regarding in demographic these residences. Despite home by new moderation favorable, uncertainties, negatively economic in

company. of to have focused remain As our we clearly grow the and such, execution great strategies conviction around our the investments on

of to want model with I consistent again despite continued and behind Cascade. and quality work grit our and in expect Boise driver Lastly, coupled our our you financial results for the to success. our -- quarter my the for today deliver assets express third and business to us interest the solid associates economic I our focus, software when effectiveness Thank joining in your constant support backdrop. gratitude hard the are whose of our team

will phone this would any you the lines? questions please Michelle, We open welcome at time.

Yinger is [Operator of line with Instructions] D.A. Our from Davidson. first to question come the Kurt going

demand a the performance off wanted you bit thoughts how if versus thinking to, I nice EWP. you based on in relative stage, of about bounce of kind any X to look maybe impact the as file start are this on at around at Really order you wondering volumes volumes versus And the quarters, restocking. QX? of have like the kind QX alluded back underlying past like of to improvements just you

it's question. Thanks Kurt, yes, Mike. for very the much

time, quarter, much the like think point coming quarter last a this as at pretty about we So in the we're quarter. envisioning

inventories are And we're at pretty capacity, our very and order but Our strong, in good levels. file at maximum quite is high operating not condition.

as So quarter. a I the should think we QX, quarter pretty we last move see like through much

given can upland web for it. of in solid Got swings some big or terms applications? talk in maybe just whether hearing you about seeing the in substitution, guess, lumber or I-joist, what And product you're it's of trusses floor I

Yes, Kurt.

would So be my following. basically the comment

So let's in could significant say, that we've lack I-joist much obviously, when last year, builders we're over of really, so a change product previously, pretty time allocation, any directions substitution going because a get. seen there both were on availability was on of by there

Open half I is Not Web seen with the other As through you've availability. some of of the move products first think sort trusses. this of least year, challenges which we

longer lead of so business. actually our And their that's I-joist times, helped because

on that's and of bit So of depending fluid demand a situation sort a supply.

high. Maybe focus just to as that builders, point we on cycle chance a with Nate. their data it's times one spend time very is other Kurt, have

problems and helps you takes and on what time. so think adds cycle I-joist simplicity EWP the of job side, it reduce site as And speed job the about it solve -- and

want terms they builders in go go to reducing where of I to of need think in So where terms cycle times. the

of of are And I much that part as seeing as benefit think answer. a thinks result. we're I EWP some very that described, Mike

Got it.

the replenish categories of just there's lastly, then that product BMD. first seen you and Jeff, could seeing customer think here hoping And across we've through to what the gross not whether terms sense. off from different could you your inventories a about appetite makes That talk you're anything on competitive margins levels half? in perspective Okay.

positions, out-of-warehouse do And some we're you there, the very and little People but this. people that's still really relying past. in to continue that had in to nothing build as would of say, taking commodity a small confidence bit overall, are shipments, heavily we started going little run grew like as to tell I a I'd the and a the on word inventory bit. start So

to time. to honestly seen people in of this long we So which But I going are there's haven't inventories. out seasonality we are a -- going building not we're expect overall, some and think year, warehouse be

the [Operator Instructions] Maklari Sachs. question to Susan is going next Goldman with line Our come from of

question My commentary inventory more that are sort bit field. you in a is service you look mentioned bit of manage more customers. first to risk your end in to carrying or you be of support any can thinking this you the that of in environment as relative perhaps about you levels about Can your how you talk sort a volumes wanting market balance to sure support the carrying

Yes.

manufacturing expectations supplier some their of we they're job quarter to serve sure to at new to year. needs. with our make work Nate. as terms their through is sure of in in what the it's through where as Maybe that our really and are our of inventory their good and stock to partners So, look required, closely and and and to commitment, going we And of packs kind plans in trying both products Both to as their with terms closely pieces. suppliers customers just well work move our we have introducing our production of I needs do as as think have in units, terms and in in and of the terms at inventory well bulk footprint understanding we the make as are be we our they're a customers well. to going be of as things as what's well

certainly our both -- the in our all along to and for of with finish plan And of to of we want and we part created, customer be and But important So head that we our XXXX is off an confidence supplier that remain we're that's our benefit we'll part and me, success balance partners, customers part ultimately, our And that's thinking. to what are said going and we game suppliers. I and what's to who think, stock. put work will of XXXX. sheet into as

Yes.

any through parts that And think the say product there's dispersion helpful. I about any or the you when guess summer. macro nuances categories call the across there? generally in Would cycle building early into housing differences as as relative you out in you think later distinctions be might think or about That's that happening perhaps you'd is Okay. you of about that. the to products earlier that spring cycle restocking and the that And just

to as course I we're what through think a more different as go Yes, that needs maybe be. going that Sue, that well, is it's at normal point, of sometimes this served I element say have the there's think geography some is And of geography. of Nate it's will again. natural seeing served, and to served. seasonality and geography But rail expectation this be If terms inventory product always described by it by a truckload year. part or in would variability we I it how even Jeff

I or to they terms auto capital customers. going They So concern are services, anxiety that's excited to I traditionally in working which capital. And more think manage their to simply on their there's be any by our think we're working would managing support. warehouse going those of as put dependence BMD don't

of at. or warning terms in that represent signs Sue, kind nothing that things we're So looking would of early

it's and ultimately continue there. work think customers and I our staying from suppliers we'll to then to close

then to Okay. one I just in. squeeze want And more

the making and dynamics your the working quantify changes cash be about own you that can flow working thinking year. of about? business should that capital in help perhaps As that this you're the Anything in terms we in you there or for investments capital think

Kelly. this Sue, is

So Yes.

some some For sure, a we door made I in have Kansas geographies. about shop, purposeful City expanded Houston investments. mean think BMD handful shop, door of properties

i.e., say, I startup, and nothing probably you a I door you what up say, on ramped. call to because a start-up, need get specifically you think get shop would to really, need you other inventory would we've seen need But in certainly out certainly, as really So be that to pretty don't terms we've changes our we've to periods how give going I have than you're in heavy over in I swings. inventory weaker receivables into see done of terms you any made and that different I our seasonally how moves when of time get the fourth move, we enough would guidance what than quarter, typically

line going Staphos of from is come with Bank of to the America George question Securities. next Our

questions And of I had sort a ones. a congratulations longer-term and on few shorter-term the of couple modeling, performance.

once terms what I'm of this think demand more again for reflection is right fine year in Kelly, that world The of the you've seen of point it in ahead in is margins, the relatedly, you going certainly and draw a of BMD. our now BMD you've of recognizing do lot and is year-to-date all, the X%, but to what to of seen were to expectations. we similar the a too the out which of -- on And what trying outlook first margin what XQ? X.X% not in saw being or year, the we're for normal half pricing So well first the a it, be

build take I'll question, first that part it Nate kick comments. the then I'll on of to Yes. maybe my to

of third mix, So of through reminded of really terms things mixed just so was the terms third the points direct for and that we quarter product saw warehouse gave by that had margin specific what in think in what then is sorts you we our our towards how we quarter. today what or the then the to And kind we there that's far today probably that speaking the we margin guide and EBITDA -- end can in whether the on some so pace folks George, quarter sales there, sales those softly July in of move third top second profile. up of the would was far. guidance pace for did quarter our that range end But versus

let of me term, longer kick In terms to question that Nate.

basis, we've our maybe of lots and mean, in even of yes, looks to described what that investments here time. to think in in of and in facilities, do I me, performance our I continue services terms with, able George, earnings we've that our on we obviously, and how And locations -- it those, commitment longer-term obviously we we been where puts grow clear, our profile expanding just -- we there's as think that kind expand make now our consistent of grow over to and terms I continuing how including sure the takes of be goal kind on our in door the we're comments, is again, all our But To like. Kelly how been BMD. products shops. is to add do

at So of higher really to thinking a company feel but to new to about -- the we moment about know, moving our in we're that, time, ability you as as terms the execute in we're any kind in it long-term view, parts and and standard. how a trend there's lot -- of that standard again, of investing, terms of good

sales in have call, surprise the there And to late I been would because to I it call. was in it had so, a mentioned and of did velocity variance, in Was where apologize, conference and little you any XQ. or bit I if where early you the expected joining particular, upside? another ask BMD it on in to thing One be wanted if

take fine, extra then Yes. any has that add. No, see and color George. to I'll Jeff maybe you're if

better expected. talked to continue the all in we and out market think Anything the quarter. as quarter made activity through being the that we've of somewhat through would resiliency than have I second And play about the you'd else did we sales our comments, add, ramp our Jeff? way second did

us. line to very ready and general very particularly, into really and our piece, the for really played inventory were good your hand available on well say played volumes strong. would go having and And I

for Two I'll and last them ones over. turn me,

on said categories that work or you're product So differently, Are that is well step, distribution your -- in else? one, certain product given Wood. in gaining it are quickly performance real that model the out, and there the I just certain sequential you that is been great there something we're function EWP particularly just pick then environment are X there think drop you in think trying And you a through share of seeing categories I'm -- in? BMD? changes but anything, again, slight has lagged pricing, called not to or

question there, -- hand let products kind relative the of George, BMD we in kind I BMD and start, terms profile and see say, then of over the I'll I'll for risk it what of on me to kind Mike. any of Maybe don't would it. trends to

as to think continue our new and products key I services. they new add suppliers

abundant, great. their for so that And opportunity is and and more puts And get service. serve complex customers which complex burden more respects, that more, in really, with line more frankly, us many SKUs in and our product to think, I BMD but that --

me, at is story. So our of key that some to of partners, I part look their when

great, I things just products and especially where think not George, last new hesitant were given availability. in couple they was little in ability of over of in environment terms a were pandemic an years, were bit introduce to we their the a short

transition and again, in BMD. Maybe of turn pick working think incredibly before they expect the seasonality, Mike, capital. And suppliers we expect think that would we as their seasonality we serve services. about is to that, BMD that supportive products, fit So positioned to well we forward. and is our to move new terms kind I support of the as through as normal again, focus of, kind customers they continue of kind other new and again, on the it trend thing, that over of customers And up is incredibly to

really up. feel good So again the set we franchise we're about and how

general? just or X take than to were, say, asking ago, volume Are in a your quarters quarter more suppliers they

think. don't I No.

going think very they to I well we're pace. So that aware they're to our I buy think -- sales know

maybe and seeing EWP there. just And then on we're sorry. Mike George, expecting kind question on of what and the pricing

explained EWP George. is modest as sure. decline best follows. Yes, pricing, probably yes. that But

the value a EWP proposition components. different So Boise Cascade of for variety includes

field competitive the are this bring we necessarily market Our we've software our players that particular on had services, the others the some those saw certain -- geographies. pricing. all and services, in address soaring course, to market rely more we and don't components in on our There thought area, where of occasions that price. And pricing necessarily of X

going evaluate need will We're there forward, and to a Going in and to whether on to we're the are seen whether going modest was continue to do proposition. to see quite the if anything. primary we quarter. do pricing there in be doing. And decline what you where value is coming case we we've geographies can focus that's the price been But determinant remain that our will

from Our Truist. Mike with next question is going to the Roxland come line of

on Kelly, and quarter. strong a Congrats Jeff, Nate, Mike

to me one to begin start. quick one for Just

number operate versus earlier that rate heard year? XQ? -- your running earnings I may in that operating how stand Wood comment in I versus a also where the you full, Just still -- get can versus since and where sense XQ. could But apologize of files, of your as missed comment just comment today, for Products have the order and so it to And you if trying EWP you today comment on has if this. on not do calls you well juggling that but how do and they I maybe changed changed you're a XQ

give numbers. I'll you Mike, Yes, those

earlier different general think geography. So the year, if was first, little in the is would say a I bit statement. question It you the about by of operating QX a second rate, sort

We is demand. okay, and into percent, increase sort comment. of the were move a was significant this an around So there our of in quite capacity. you running QX, in XX-odd Then probably overarching particularly West,

While in continues earlier been year and the quite to South has strong. the strong be

have see move rate I'd And and say, is I while to situation demand around it operating now, -- XX-odd will what this think our a as happens next probably with have you you'll stay or for where percent. quarter. what that's So you, through the

also relates start EWP, it with files, to As plywood. address order but we'll I'll

in files really order to Southeast. climatic So QX in And in so quite with the strong conditions EWP were in in California, to And then West. in with the QX, very changes the take maybe off particular. in begin West the not started early strong the

as West the I'll we to South QX, that the we say and in actions make were where to strong people took files quite very the operations enough us has players additional on relative our spent that bring lead our year well last today, in we to the keep really $XXX quite particular supply as and run have million other space. allowed veneer sure sure, order order to times strong So our in files year our the we had both and earlier to

longer time a And plywood Yes, a they week strong than sort the order out Kelly position. while out, a EWP front they're normally -- system. more produced probably on moving of our they be roughly we've relates plywood. us the typical for this several normal of files in are plywood lead are of so for we've plywood to as and of sort compared that times, what and our it or in they weeks a of are files pointed lead been call order as into continue lot little year, to That's bit time. So our I'd moved to

It's Excellent. great.

one follow-up that. Just quick on

XQ XQ? has files quarter, any know there third As from EWP, into I probably acceleration the been into we're month for order a and

good yes, say, a question, real I Mike. that's No,

I building the of season. say still I'd this sort of particular think We're works sort of we're in quarter, month this. like of it like the still -- X after height

I seasonality thing, go to going the Now earlier business. become we're have into mentioned in and year, our on, later to August starts we the into think get and Jeff September, might particularly a

of a moment, the the I expect to end towards really for end change we quarter, really quarter don't happens quarter. go sort to would that quarter seasonality normal By the I the but I at of downside, change whatever the and normal, if we as change think move in much means either direction, things So fourth is through the a of back of see need third watch the the just that we'll to start see some these which and things. that

Products Very just general. it. And then one question just Got on helpful. Wood in final

You job for expect just done of plus on improve that be cost on And to high-cost of a on Products. other structure that guys perspective, facilities, -- the we margin a XX% further working a Wood could cost margins? go-forward EBITDA that fantastic any you initiatives should from you're streamlining basis? EBITDA Can closing a business comment normalized

CFO, have first then I'll question. at address the part, Well, let capable and of that the second part maybe my I'll a crack

So we're it, to now always decade. been his little in commentary of working as of sort Yes, And alluded Kelly at, for this replacement you I'll we've bit center a machine say, a Mike. the on kind more said, than

machine unit uptick involved of in there because in program have efficient because replacing volume. capital both are get So centers assets machine are those in That we're centers. And sometimes there where we terms cases also people the output more time sometimes expenditures a and some just costs new in they're an per old -- less we centers. of in with overall, machine us better

of in will a have I X, sort moving anticipate So old X continue us, coming in but Wood cost our an and I'm never old will to structure some to X, has component. as plan machine the forward. replacing years, replace And centers sure on the continue ending forward we over we Products, commentary we that Kelly move improvement and second hopefully, in invest machine centers to give

Yes.

in long was hear EWP. can a before, the has last which component, as with the the is Wood the I can historically, see Products, and you we On second mean, that and we've acquisition grow year. to been you the for strategy really And we've cleared Mike, what time spoken certainly, focus did and that veneered constraint constraint

strategy. so safely our execute higher that strategy. right And to can fits and our priced continue product, margin, we more EWP, into upon

and better want to it historically. that continue to performance continue trend And And so that on margin yes, -- we And our better than to efficiency. are the expectations so Mike's business. to in be point, do to was our focus costs look that and we'll invest

comes with question line Ketan next Mamtora from BMO. the Our of

EWP. Any to QX in Maybe side EWP of first the so impact as the higher question is far costs start way concerned? to quantify with OSB

Yes.

we average So mechanisms -- in our think pay. terms we supplied kind of to we how OSB, before, as it's a of we rolling I do the we've -- that spoken have concept

think And the could so yes, probably as comes and North of in OSB index. the terms you I to extent Central kind of that kind use of up,

the strength we again, where the trend pretty you But going have that goes, to have. -- be. that metric But could price of in to of cost specific we increase would the OSB as terms to web our a a there's can kind stock a for is grade that requirements meet Now that what use the use you we as produced lag. be use

as Got lag? X what it. to it typically, about And months? Kelly, a think Is is X good Is proxy a month? it

Yes.

that concept average kind it's Keith, quarter, that we XX-week a of it's because we have. So --

capital that's Obviously, Got it. a to balance strong helpful. very And then No, it. shape. switching sheet That's Got helpful. is in the allocation.

sheet? as cash. you you balance One, preferred you through to much you environment. to should substantial or economic the Kelly, of share uncertain think pipeline it's navigate think do approach on Curious You whether as an how are have sort here? of deployment, special cash And either Nate how of dividend, about then putting net M&A historically, M&A, your about kind talk repurchases can you kind or

Yes.

capital question a So broad that's big around allocation.

way, this hit Ketan. Let it me try to

in my has remarks allocation about in capital changed think terms heard think we you not and it. of how we prepared -- terms that of So in about how

have us. having around that, and sheet, of ahead projects about true, some the Wood maybe new We the that shops. some did optionality a pipeline Products happy some us robust and opportunities strong additional then organic in for Mike spoke in BMD of things we're opportunities, balance that both potential the markets comments that to additional door of gives Your reference very flexibility that's and a capital and and

We facilities out lease buy that have some we leases. those potentially can

be and in markets. our looking We expanding of a at that few we presence have things us ahead might existing relocating

So the quarters. all a pipeline of do here pretty meaningful that said, next over us we have really several ahead

our we in shareholders, have to returns as about year. And to there'll or a the to October. now the the couple we ability and look next step, XXXX. look to what the the as well about pace until complete relates our additional to like All next next returns year, before additional so as of will from those end Board factor that we later to as when with if when be on that things into to we market of our our want we those October we And organic it things shareholder and may we that think conditions we consider growth with of what conversation as in execution any, spoke think kind projects want get consider in what conversation I close Board the

from Our Benchmark line next question The the going with to is Reuben come Garner of Company.

quarter. strong the on Congrats

on kind So first, the a longer of BMD an term. to margins follow-up question earlier

I know every there for Is guys to it couple was your looking what do XXXX, of direct warehouse margin kind what of in us demand maybe to of lower like You that clarity today kind you're got versus of going to a prior And mix tell good any things. of quarter. maybe way risk I business maybe on question is headwind when business? But if feel a you've that normalize some your like COVID? this back the margin XXXX officially -- customers versus ask you a things even is some there and kind any good because again is or could

question, good Yes, ask Reuben. question. we'd if be And didn't you that disappointed

whereas between I and confidence direct, say, market there's mix pricing forward on call mix, warehouse it, warehouse of availability there's and risk, risk. back of, around probably frankly, of of we're and And I concern so around when the the get working today, traditionally not in XX% laser inventory in more like range in again, and probably So the downstream to say that would product. inventory the XX% range. focus would people to maybe traditionally, concern terms the to can the or the XX% XX%. And XX% comes And capital just to the supply today, in then ability --

they to they the with take feel risk don't to want don't go don't and need going along. the so they And long

higher exactly in So do it have right. that's of does up terms how frame margins the I you're That on But mix. warehouse. we

so margin that shift if to our a higher market back do get of And direct, profile. negatively we would where there a percentage is impact

had just and products the our about again, new we earlier, thing, Maybe as adding services think if and that complexity. suppliers, Reuben, they're and is, other it's to Nate, you commented add

generally that as more creates of maybe some taking both to products out-of-warehouse of new So customers of services. opportunity an those opposed quantities and

dependence more question balance customers it's the Again, do their sheet having So having footprint the it. of and inventory BMD, we exactly what which again, is and It's simply not a to reliance not really do. on

services, So to be the forward. going BMD again, that new the product as think, I equation of becomes obvious dependence part is going more and then well. think the there, complexity, more more additions And on the I new

your that a "softer already that everything front, even hasn't is just that all I EWP And bottomed concerned guess, of reduce that to market seen it Is the downside? general we've thinks in product And at Is pricing, how the concern the mean been given forward it's it risk Great. think things kind I about out. it customer strong price why uncertainty base you been there's the line period." categories? products? appears Okay. in that on is have commodity or date, just I the least to the mean,

start and they invite to. I'll to guess add color Jeff Nate want then or if I

and if it commodity, buckets, general you the So line break into X EWP.

quarters than reverted and we've maybe all risk, way to historical downside couple are, price we are the So we've point, commodity, as years. averages are round but certainly, some less it's your is there appear alluded we a EWP, level In last tripped what not back and erosion. to it seen the would to, It's experience recent recent of of marketplace. competitive to continuing in

And I is deflationary has there to is think up, certainly come General And general Jeff so we're but that's little category. generally add appropriate. are responding where here. going for say there in risks, line a example, held off categories some. some I like pricing product line more color doors, And are think we would the

just decrease feels would we've experienced. imported right tell of Reuben, those you the That is of massive scrap couple except the be solid if one metal of anything general you at look area because ocean metal. And I now, on look And then areas really you freight that that that's would futures line, what if doing, at the a it really a container that concern. in a in gets in areas.

you something quickly. If have and now on you off move trying pretty you're to have come, ground, the replacement that

big areas So of the be those will concern.

next is question question Susan a Maklari from our Goldman And Sachs. follow-up with

have just things X that wanted I up I follow to on.

builders that the to third quarter. get I as response and quarter. consider when through of back the I you the committed the But questions, the we guess, as in on there's fourth previous that some is ground what's the first The the into for seasonality think mentioned going potential you to about one starts half Mike out and think putting

into to it or muted think more selling that of skirt into a next year actually some of potential on inventory any Is XXXX the sort the response the seasonality year? about sort end to you that going see parts as we and we early season. the that go have think Looking you of hand maybe there of as of even

Yes. Good question.

quarter. be your some how job is messages, brings our guess, this the could and then hot the I to this impact what for winter compared plays of will Kelly. can conservative some So, know, we'll out -- and that can Yes, in be we balance others we sites, to of think. we'll point, we very what somewhat fourth as see see the year. August the

macro around monetary I think out that stuff, plays you how environment the see So got normal then we'll industry and policy.

little hearing we're and add others. from thing certain markets start was really due more they're in clear in some those be what going confident about that, to loud fourth there in could late markets, that dealers, on I'd bit one really, year And weather. this to a than quarter a

seen well. we've heat too some could that sounds like because markets Yes. some delays of just also incremental intense in And the it be there as

like So veneer, you are when your through that's demand weather need plywood that's a And about and other my out? things think factor plywood And you and about all these is the coming capacity balancing of for about EWP thinking how it is question feels the thinking sort on capacity. around. in

be at look in because group. because rated -- the not to That's able moment. we EWP in the veneer veneer, is way EWP the integrated being the to the in that it's which goes it, used of model, case this really product others into run the that So profile we stress we at always just perfect our particular so that's demand little different bit would have some all situation, a

that picks So in demand would have if go redirected would up strong less or be some be theory, continues to the into of production EW veneer EWP. into plywood we might EWP today plywood into over time, -- because

I into on, earlier think its Kelly looking put the So veneer our and mentioned focus is best use. to highest

we'll simply ago, forward, have the compared of to clearly a production move because plywood total obviously, we of So as couple more years acquisition.

to think the the they're last other item year same imports The of year, quite look this say, might Brazilian plywood, down you about time is to at if dramatically. you like compared

overall And correct. approximately that math so situation is my if is the

year. We have of quarter compared equivalent last less coming in plywood same feet million from about Brazil to XXX the quarter last the

somewhere, the a that's have So thing that's local that doesn't plywood perspective and market. go because what from plywood good to the supports

because stronger could else. that, a going historically than little bit be forward plywood nothing maybe So of if

And And showing Jorgensen this over turn would I'm like the questions to at Nate no remarks. time. any for further back I to further conference

be us well. interest joining continued for and Boise Thank you. your appreciate for Cascade. of Michelle. you our be Thanks, safe, and everyone morning support update, We Please thank and this

you Thank concludes today. your participating. for conference This

You may now disconnect.